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PAYE payment by variable direct debit generates late payment notices


Published: 11 Jan 2023 Update History

Late payment notices will be suppressed, but not immediately.

ICAEW’s Tax Faculty has previously explained how HMRC notifies employers of the date that their direct debit (DD) will be collected. The faculty noted that, as HMRC collects the DD a few days after the normal due date for electronic PAYE payment, a late payment interest charge appears on HMRC’s employer liabilities and payments account. This interest charge is then reversed, provided the direct debit is collected on the first application.

The Tax Faculty has recently discovered that in addition to the interest charge, HMRC automatically issues a generic notification service (GNS) late payment notification, reminding the employer that they have not paid.

As well as asking HMRC not to display the interest charge pending collection of the DD payment, the faculty has asked HMRC to suppress this GNS notice. HMRC has replied positively to this request. It is aware that it is inappropriate to be issuing these messages where the PAYE bill was successfully collected via DD variable payment at the first attempt. HMRC regrets that this was not factored in when the DD service was designed. It will make changes to correct this, although it may take some months.

HMRC has also updated its mainstream guidance on paying PAYE to explain how to set up a variable recurring direct debit at Pay employer’s PAYE – direct debit.

Please let Peter Bickley have any comments on how HMRC’s new variable DD service is working for you.

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